In the

United States Court of Appeals

For the Seventh Circuit

No. 18-3051

CHRISTOPHER REGAN and

NORTHWEST INDIANA CREATIVE 

INVESTORS ASSOCIATION, INC.,

Plaintiffs-Appellants,

v.

CITY OF HAMMOND, INDIANA,

Defendant-Appellee.

Appeal from the United States District Court for the

Northern District of Indiana, Hammond Division.

No. 2:16-cv-00098-JTM — James T. Moody, Judge.

ARGUED APRIL 3, 2019 — DECIDED AUGUST 19, 2019

Before WOOD, Chief Judge, and BAUER and ROVNER, Circuit

Judges.

ROVNER, Circuit Judge. The plaintiffs in this case press a

dormant commerce clause challenge to a local ordinance that

requires a residential property owner who wishes to make
2 No. 18-3051

repairs to the residence either to obtain a license or to hire a

licensed contractor; but a homeowner making repairs to the

single-family residence he or she occupies is exempted from

this requirement. The plaintiffs argue that this scheme discriminates against interstate commerce and to that extent is

contrary to the dormant commerce clause. But the ordinance

draws no distinction between in-state or out-of-state property

owners and imposes no burden on interstate commerce. We

therefore affirm the district court’s entry of summary judgment

against the plaintiffs.

I.

Plaintiff Christopher Regan lives in Cook County, Illinois,

but owns real property in the City of Hammond, Indiana, that

he leases or rents to others. The Northwest Indiana Creative

Investors Association, Inc. (“NICIA”) is a trade association for

real estate investors who likewise own and lease real property

in Hammond. As landlords, Regan and NICIA members

naturally have the need to make periodic repairs and improvements to their Hammond properties. In order to repair or

remodel their properties, the Hammond municipal code

requires that they either obtain a license from the city or hire a

Hammond-licensed general contractor. Hammond, Ind.

Municipal Code §§ 150.15, 150.17. In order to obtain a license,

a general contractor or landlord must, among other things,

submit an application, pass a test and criminal background

check, and pay a fee. (General contractors are subject to

additional requirements and obtain a broader license.) The

code makes an exception for an individual making repairs or

improvements to a private, single-family residence in which he

resides. Any work he performs will be subject to review and
No. 18-3051 3

inspection by the city building commissioner (as would

licensed work), but he need not obtain a license in order to do

the work. §§ 150.15, 150.17. 

Regan and NICIA contend that the license requirement,

coupled with the exemption, impermissibly burdens interstate

commerce by imposing costs on property owners who, like

Regan, do not reside in Hammond which locally-domiciled

homeowners do not have to pay. That burden, they argue, is

inconsistent with the dormant commerce clause. The district

court disagreed and entered summary judgment for

Hammond. Regan v. City of Hammond, Ind., 331 F. Supp. 3d 798

(N.D. Ind. 2018). Judge Moody reasoned that the city’s license

requirement does not facially discriminate against property

owners who do not live in Hammond, does not have a disparate impact on those owners, and is rationally related to the

city’s interest in public safety. Id.

II.

The commerce clause gives Congress the power to regulate

commerce among the states. U.S. Const. Article I, § 8, cl. 3. This

provision “presumes a national market free from local legislation that discriminates in favor of local interests.” C & A

Carbone, Inc. v. Town of Clarkstown, N.Y., 511 U.S. 383, 393, 114

S. Ct. 1677, 1683 (1994). The clause therefore comprises not

only an affirmative authorization for Congress to regulate

interstate commerce, but a corresponding restraint on the

power of state and local governments to regulate that commerce. Dep’t of Revenue of Ky. v. Davis, 553 U.S. 328, 337–38, 128

S. Ct. 1801, 1808 (2008); Am. Trucking Ass’ns, Inc. v. Mich. Pub.

Serv. Comm’n, 545 U.S. 429, 433, 125 S. Ct. 2419, 2422–23 (2005).
4 No. 18-3051

That restraint is referred to as the dormant commerce clause,

and it precludes states and municipalities from erecting

obstacles to interstate commerce even where Congress has not

regulated. Tenn. Wine & Spirits Retailers Ass’n v. Thomas, 139

S. Ct. 2449, 2459–61 (2019); Comptroller of Treasury of Md. v.

Wynne, 135 S. Ct. 1787, 1794 (2015); Endsley v. City of Chicago,

230 F.3d 276, 284 (7th Cir. 2000). The fact that a state or

municipal law affects interstate commerce in some way is by

itself insufficient to render the law suspect under the commerce clause, as almost any local regulation is bound to touch

upon interstate commerce. Nat’l Paint & Coatings Ass’n v. City

of Chicago, 45 F.3d 1124, 1130–31 (7th Cir. 1995). “Dormant

Commerce Clause doctrine applies only to laws that discriminate against interstate commerce, either expressly or in fact.”

Park Pet Shop, Inc. v. City of Chicago, 872 F.3d 495, 501 (7th Cir.

2017) (emphasis in original) (citing Nat’l Paint, 45 F.3d at

1130–31).

Our precedents place state and local laws into one of three

categories for purposes of commerce clause analysis, depending on the degree to which they affect interstate commerce:

(1) laws that expressly discriminate against interstate commerce; (2) laws that, although neutral on their face, bear more

heavily on interstate than local commerce; and (3) laws that

may have a mild effect on interstate commerce but in practice

do not give local firms any competitive advantage over firms

located elsewhere. Park Pet Shop, 872 F.3d at 501–02 (citing Nat’l

Paint, 45 F.3d at 1131). A law falling into the first category is

presumed to be almost per se unconstitutional and is subject to

rigorous scrutiny that will allow the law to stand only if it

serves a legitimate governmental interest and there is no
No. 18-3051 5

reasonable non-discriminatory means of furthering that

interest. Park Pet Shop, 872 F.3d at 501 (citing Nat’l Paint, 45

F.3d at 1131); see Davis, 553 U.S. at 338, 128 S. Ct. at 1808; United

Haulers Ass’n, Inc. v. Oneida-Herkimer Solid Waste Mgmt. Auth.,

550 U.S. 330, 338–39, 127 S. Ct. 1786, 1793 (2007); Or. Waste Sys.,

Inc. v. Dep’t of Environ. Quality of State of Or., 511 U.S. 93,

100–01, 114 S. Ct. 1345, 1351 (1994). A law falling into the

second category is analyzed according to its effect. If the

impact is so strong that the law effectively operates as an

embargo on interstate commerce, it is treated as the equivalent

of a facially discriminatory law and is subject to the same

demanding scrutiny given to such a law. Id. (citing Nat’l Paint,

45 F.3d at 1131). But if the law regulates even-handedly and

only incidentally burdens interstate commerce, then it is

examined under the balancing test set forth in Pike v. Bruce

Church, Inc., 397 U.S. 137, 142, 90 S. Ct. 844, 847 (1970), to

determine whether it is animated by a legitimate public

purpose and, if so, whether the burden the law imposes on

interstate commerce is excessive in relation to that interest.

Park Pet Shop, 872 F.3d at 501–02; see Davis, 563 U.S. at 338–39,

128 S. Ct. at 1808–09; Brown-Forman Distillers Corp. v. N.Y. State

Liquor Auth., 476 U.S. 573, 579, 106 S. Ct. 2080, 2084 (1986). A

law falling into the third category is examined solely to

determine whether it has a rational basis. Park Pet Shop, 872

F.3d at 502 (citing Nat’l Paint, 45 F.3d at 1131–32). The district

court concluded that the Hammond ordinance falls into the

third category and indeed is justified by a rational basis. We

review its conclusion de novo. Legato Vapors, LLC v. Cook, 847

F.3d 825, 828–29 (7th Cir. 2017).
6 No. 18-3051

The plaintiffs are landlords, and as the ordinance concerns

landlords, it draws no distinction between those who are

domiciled in Hammond (or elsewhere in Indiana) and those

who are not; all landlords are subject to the license requirement. So the landlord who lives in Chicago and owns a rental

property in Hammond must obtain a license or hire a licensed

contractor, but so must the landlord who lives next door to his

Hammond rental. The ordinance imposes no impediment or

burden for the non-Hammond landlord that it does not also

impose on the Hammond landlord. There is no disparity in

classification of local versus non-local landlords nor is there a

disparity in how the two are impacted by the ordinance. See

Park Pet Shop, 872 F.3d at 502 (municipal “puppy mill” ordinance that prohibits all large commercial breeders from selling

domestic pets to local pet stores regardless of where breeder is

located neither expressly discriminates against interstate

commerce nor has disparate impact on out-of-state breeders). 

It is only the exception the ordinance makes for occupant

homeowners that causes the plaintiffs to complain that the

ordinance is inconsistent with the dormant commerce clause,

because by definition only a property owner who lives in

Hammond can be an occupant of a Hammond residence. The

occupant can, if he chooses, save himself the expense of

obtaining a license or hiring a licensed contractor to make

improvements to his property; and he is the only property

owner who is given that option. But the exception is tied to

occupancy of the property rather than the owner’s domicile; a

Hammond-based landlord will not qualify for the exception

even if his tenant lives next door to him in the adjoining unit of

a side-by-side duplex.
No. 18-3051 7

The premise of the plaintiffs’ commerce clause challenge is

that all owners of residential property in Hammond are

participants and competitors in the national housing market,

so that to give an occupant homeowner an exemption from the

license requirement is to discriminate in favor of the occupant

against the non-occupant homeowner, including in particular

the landlord who is not domiciled in Hammond. But occupant

homeowners are not similarly situated with landlords, as the

district court recognized. The owner-occupant of a singlefamily home typically is not deriving rental income from his

property, which means that he or she is not in meaningful

competition with landlords. Yes, both own property, and both

may ultimately sell that property in the national market, but

during the term of their ownership, they are using the property

for different purposes. Moreover, the occupant also bears the

consequences of repairs or improvements made to his home in

a way that a landlord does not. Of course, all repairs and

improvements are reviewed by the Hammond building

commissioner for compliance with municipal codes, so one

may presume the alterations by the occupant owner are good

enough to pass inspection; but compliance with local regulations does not ensure that the craftsmanship is sound, effective

in resolving any problems that necessitated repairs, or sufficient to prevent future problems. And as between the occupant

and the landlord, it is the former who will be without heat,

water, a working kitchen, a watertight roof, or a sound

staircase if the repairs or improvements are not made properly.

The occupant and the landlord alike ultimately may suffer the

economic consequences of bad work (a tenant might withhold

rent or abandon the lease), but only the occupant actually
8 No. 18-3051

experiences the deterioration in living conditions with its

attendant hardships and dangers. In the district court’s words,

“While resident homeowners will bear the risk of their own

poor craftsmanship, building contractors and landlords impose

the risk of faulty construction upon current or future tenants.”

331 F. Supp. 3d at 805.

Given the material distinctions between occupant owners

and landlords, the exception for occupant owners does not

make the ordinance one that discriminates against nonHammond property owners, so as to trigger a presumption of

invalidity. “[L]aws that draw distinctions between entities that

are not competitors do not ‘discriminate’ for purposes of the

dormant commerce clause.” Selevan v. N.Y. Thruway Auth., 584

F.3d 82, 95 (2d Cir. 2009) (quoting Town of Southold v. Town of

E. Hampton, 477 F.3d 38, 49 (2d Cir. 2007)); see Gen. Motors Corp.

v. Tracy, 519 U.S. 278, 298–300, 117 S. Ct. 811, 824–25 (1997).

Hammond’s ordinance does not impede interstate commerce

in the sense that it poses an obstacle to non-residents who wish

to invest in Hammond rental properties or imposes a surcharge on such non-residents that is not imposed on local,

similarly-situated investors. Nor does it otherwise impose a

disparate burden on non-Hammond landlords so as to trigger

the Pike analysis. As we have said, the ordinance treats all

landlords the same, regardless of whether they are domiciled

in Hammond. Consequently, the law falls into the third

category, and is subject only to rational basis review.

And for the same reasons that occupant homeowners are

not similarly situated to landlords, the license requirement and

exemption easily survive deferential review. Hammond has an

obvious interest in the safety and habitability of the homes in
No. 18-3051 9

which its residents live, and the ordinance is a legitimate

exercise of its authority to promote that interest. The license

requirement serves to ensure not only that whoever performs

the work, be it the property owner or a contractor, is familiar

with the local code requirements and is therefore capable of

completing work in a sound manner that complies with those

requirements, but that he lacks a criminal background that

may place the property’s owner or occupant in jeopardy of

fraud. Insofar as the exemption for occupant homeowners is

concerned, it is reasonable for the city to think that such

homeowners, who have a keen interest in the adequacy of

repairs and improvements made to their own homes, will also

endeavor to comply with all local requirements. 

III.

Hammond’s licensing ordinance does not discriminate

based on the domicile of a homeowner in name or effect and

has the support of a rational basis; it therefore poses no

problem under the dormant commerce clause. The district

court property granted summary judgment to Hammond.

AFFIRMED